[51006] Gulf Crisis: Iraq offers huge oil discounts due to risks in the Strait of Hormuz
[51006] Gulf Crisis: Iraq offers huge oil discounts due to risks in the Strait of Hormuz
Iraq is offering significant discounts on oil exports in an effort to encourage buyers to take on the risk involved in passing through the Strait of Hormuz.
The tension in the Persian Gulf is affecting oil prices
Following the rise in security risks in the Persian Gulf, Epoch - Magazine | News | Commentary and ynet news report that Iraq has begun to offer its regular customers significant discounts on oil purchases for the month of May.
According to the report in Epoch, the Iraqi State Organization for Marketing of Oil (SOMO) indicated that the discount on Basrah Medium crude oil could reach up to $33.40 per barrel below the official price. The decision comes against the backdrop of the need for oil tankers to enter the Gulf and cross the Strait of Hormuz, a move that is currently perceived as particularly dangerous.
In a SOMO document cited by Epoch, it was clarified to buyers that "force majeure will not apply to this offer, given that it was provided under existing exceptional circumstances that are already known to all parties." This phrasing highlights the official Iraqi government's acknowledgement of the current security complexity in the region.
Meanwhile, the energy market is responding to these fluctuations with global price drops. As of the report, the price of a barrel of Brent crude fell by about 1.65% to a level of $112.6, while the price of a barrel of WTI crude recorded a daily decline of about 2.5% to $104, as published in Epoch.